The hospital site will be converted in phases into administrative and outpatient uses after the district's new $690 million hospital is completed in 2011. Plans also call for offices, retail stores and housing to be developed on the site.

Some have expressed concern that the district was scaling back its plans for the downtown hospital as costs have increased for the new medical complex, under construction in the Escondido Research and Technology Center in west Escondido.

Some City Council members had adamantly opposed allowing the new hospital in the business park, fearing that it would hurt downtown Escondido's economy. Palomar, on a hill overlooking downtown, has been a fixture in the city since it opened 58 years ago.

But Covert said it's impossible to have all the facilities the district will need at the new hospital. “We still physically need the (Palomar) campus,” he told the board of the Downtown Business Association at its meeting yesterday.

The district will work with partners and developers to build a rehabilitation center, skilled-nursing center, apartments and homes for employees, an assisted-living complex and retail development on the campus, Covert said.

Plans also call for moving the district's corporate and administrative offices from Carmel Mountain Ranch to downtown Escondido. The city of Escondido is responsible for work on road realignments and improvements that will better connect the revitalized hospital campus to downtown streets.

Covert said the district is close to acquiring a parcel at 451 E. Valley Parkway and has already purchased a four-plex on that street as part of the redevelopment plans. The four-plex, which has been torn down, will become a temporary parking lot.

Palomar Pomerado Health is also negotiating for another parcel on Valley Boulevard near the hospital, he said.

Covert said the district has bought a building at 456 E. Grand Ave. for some of its corporate and administrative offices. He said he expects that some employees will be working out of that building in May.

Eventually, all of the district's corporate and administrative offices, which house a few hundred employees, will be in Escondido, Covert said.

Several Downtown Business Association board members said that's what they wanted to hear – that corporate offices are on the way and that Palomar Medical Center will be redeveloped – so they can spread the word.

No doubt, money is an issue, Covert said. Construction costs have gone up, he said, and that's why a women and children's health center will remain at Palomar a few years instead of opening at the new hospital in 2011.

Covert said the district will be able to issue revenue bonds around 2017 for improvements to Palomar, after it pays off bonds issued in the mid-1990s.

At the end of Covert's talk, former mayor and business association board member Jim Rady asked: “So, we can tell the naysayers you're not hoodwinking us?” The business group's chairman, David Barkin, jokingly said that was a typical Rady question.

Covert's terse reply: “In one word, yes.” He said the district will honor its commitments every step of the way.